Bayer’s Stock Nearly Doubled, but It’s Burning €2.32 Billion a Quarter — July 9 Will Decide the Next Move

Despite a 37% rally and Supreme Court win, Bayer faces €2.32B negative free cash flow, €33B debt, and pending settlement approval. Operational challenges persist.

Bayer’s share price has rocketed 37% over the past 30 days and added another 24% in the week since the US Supreme Court handed the company a landmark legal victory. Yet beneath the euphoria, the numbers tell a bleaker story: free cash flow plunged to minus €2.32 billion in the first quarter alone, and net debt sits at roughly €33 billion. The stock’s near?vertical climb has pushed the relative strength index to 79.5–80, a zone that traditionally signals exhaustion rather than a fresh leg higher.

The Supreme Court’s June 25 ruling was the catalyst that turned a strong rally into a sprint. The nation’s top court decided that federal glyphosate product?approval rules override state?level requirements, stripping the legal foundation from tens of thousands of lawsuits alleging inadequate cancer warnings. Investors celebrated, but the decision does not erase all litigation exposure. A separate class?action settlement in Missouri, valued at up to $7.25 billion, still needs final approval from a St. Louis judge on July 9. That hearing is now the dominant near?term event for the stock.

If the judge signs off, the combination of the Supreme Court win and the settlement would allow Bayer to dramatically reduce its decade?old glyphosate battle. Plaintiff attorneys have already signaled they may challenge the settlement, arguing its terms are too favorable to the company. Even if it passes, lawyers are exploring new theories based on design defects or negligence to circumvent the federal pre?emption ruling.

While the legal drama plays out, the financial pressure continues to build. Bayer’s net debt stood at €32.5 billion at the end of March, and the company expects to burn approximately €5 billion on legal costs alone this year. Finance chief Wolfgang Nickl has pegged total cash outflows for litigation at five billion euros. The resulting negative free cash flow is the main reason the stock’s valuation remains deeply discounted despite the recent surge.

On the operational side, the pharma division is juggling growth and decline. The prostate cancer drug Nubeqa and the kidney?disease treatment Kerendia are both delivering strong sales gains, partially offsetting the steep drop from the blood thinner Xarelto, whose patent losses slashed revenue by a third to $2.6 billion last year. First?quarter pharma sales reached €4.2 billion, but management expects the underlying business to shrink slightly in 2026 before returning to mid?single?digit growth from 2027 onward. The long?term target is an operating margin of roughly 30% by 2030.

Two pipeline developments offer hope. Bayer recently struck a collaboration with Iambic Therapeutics to use artificial intelligence to drastically shorten drug?discovery timelines, and it acquired Perfuse Therapeutics for $300 million upfront to secure a promising glaucoma candidate. Meanwhile, the much?anticipated blood thinner Asundexian has been granted accelerated review by the FDA and China’s drug agency, with the European Medicines Agency following suit in June. A pivotal study showed Asundexian cut stroke risk by 26% without an increase in bleeding events compared with placebo — a clean safety profile that could propel it to blockbuster status. However, Asundexian failed in an earlier atrial fibrillation trial in 2023, reminding investors of the pipeline’s inherent risk.

The next big test comes on August 3, when Bayer reports second?quarter earnings. Analysts will focus on cash flow generation and any update on the pace of debt reduction. The stock currently trades just 4% below its 52?week high of €49.93, but the rally rests on two fragile pillars: a successful Missouri settlement and demonstrable improvement in the core business. If either falters, the shares could give back a significant portion of their gains. If both fall into place, a fundamental re?rating may finally begin.